Rising mobile penetration and ICT sector growth bring economic development to Côte d’Ivoire

Telecoms firms in Côte d’Ivoire are increasingly tapping into opportunities stemming from increased connectivity. In parallel, the private sector as well as the government are applying tech-driven solutions for socio-economic development and working to make Abidjan a regional centre in the industry.

In 2018 the country’s ongoing growth in mobile money adoption sparked financial innovation, which, along with increased internet capacity, is expected to benefit the development of local content along with value-added services. However, stakeholders will need to dedicate more efforts to digitalising private and public structures in order to optimise the sector’s economic impact going forward.

Performance

ICT in Côte d’Ivoire has experienced sustained growth in recent years led by expansion of telecoms services, adoption of digital services and efforts towards digitalisation supported by new regulations and investments aimed at increasing the sector’s weight in the economy. According to the Group of ICT Sector Operators (Groupement des Opérateurs du Secteur des Technologies de l’Information et de la Communication, GOTIC), in 2017 the sector accounted for 8% of the economy and was mainly dominated by mobile network operators (MNOs) (85%), followed by information system and information technology companies (12%), and internet service providers (ISPs) (3%). In terms of employment, the industry provides some 200,000 direct and indirect jobs. The National Development Plan 2016-20 – the government’s roadmap aimed at bringing the economy to emerging market status, while boosting industry and reducing poverty – targets raising the sector’s share of GDP to 15% by 2020. In 2017 the fiscal revenue generated by the sector reached CFA350bn (€525m), equivalent to approximately 13% of the state’s income.

Thanks to enhanced telecoms infrastructure, Côte d’Ivoire ranked 131st out of 178 countries in the 2017 ICT Development Index, which is published by the UN’s International Telecoms Union and based on internationally agreed information and communication technologies. The ranking marks a move of three spots over 2016, placing it first among the 15 members of ECOWAS and 9th in the African region.

Structure

Following a restructuring of the market in 2016, three companies saw their licenses revoked due to a lack of compliance with quality standards, leaving three operators in the sector. In 2017 revenue from the mobile segment stood at CFA929bn (€1.4bn), up 6.46% over the previous year. France-based Orange, which merged with the previously state-owned monopoly operator Côte d’Ivoire Telecom in 2010, was the largest, controlling 49% of the market. MTN, a subsidiary of South-African MTN Group, held 32% of the mobile market share; while MOOV Telecom, which was taken over from Emirati Etisalat by Maroc Telecom in 2014, accounted for the remaining 19%. The first quarter of 2018 showed some fluctuation, with the three operators comprising 42%, 34% and 24% of the sector, respectively.

Mobile

According to figures from the country’s telecoms regulator, the Telecommunications/ICT Regulation Authority of Côte d’Ivoire (Autorité de Régulation des Télécommunications/TIC de Côte d’Ivoire, ARTCI), at the end of June 2018, the mobile penetration rate reached 131%, up from 122% one year earlier. Subscription numbers largely surpass the country’s population as mobile users tend to subscribe to different operators to benefit from the various promotions. Indeed, with a subscription rate of 53%, compared to a 47% regional average, users have over two SIM cards per person on average.

The market remains heavily dominated by pre-paid subscriptions, accounting for more than 99% of the total. According to a report by GSMA, a London-based body representing operators around the world, as of 2016 the mobile penetration rate was 85% among adults, defined as those over the age of 14, who made up around 58% of the population. This points to the significant potential for the sector over the long run, which will expand as the country’s citizens grow older. However, recent years have seen operators compete to gain new subscribers, consequently driving down average revenue per user for all three firms.

Portability

Côte d’Ivoire’s mobile network operators have been subjected to significant changes in 2018 on the back of new regulations. In a move to foster competition among operators and empower customers, in June 2017 the ARTCI granted VipNet, a local internet service and business solutions provider, a CFA326.6m (€490,000) contract to create and manage a mobile number portability system, which was officially launched in September 2018. To benefit from this service, users need to register their numbers with their operators using an identity document. This requirement aims at enhancing security and traceability and ultimately is expected to support the development of mobile money.

Quality

One factor shaping the sector’s ongoing development is increasing standards related to performance level. In September 2017 the industry regulator issued CFA5bn (€7.5m) in fines – CFA2.09bn (€3.1m) to Orange, CFA1.74bn (€2.6m) to MTN and CFA1.15bn (€1.7m) to MOOV – for failure to meet standards in areas such as accessibility, integrity, continuity and call failure. In July 2018 authorities of ECOWAS met in Abidjan to decide on common grounds to enhance the quality of service and experience in the region. Led by the assembly of telecoms operators in West Africa, the four-day workshop resulted in an agreement on general guidelines for quality management and new indicators to verify quality criteria in the 15 countries plus Mauritania.

“Number portability, number identification and quality requirements are certainly a move in the right direction for the country,” Catherine Assanvo, director of strategy at Orange, told OBG. “However, it has been a challenging year as these new developments have all come at once for telecoms operators.”

Investment

Following a trend that began in the previous decade, telecoms operators continue to invest in infrastructure upgrades. This was reflected in the World Economic Forum’s 2018 Global Information Technology Report, which placed Côte d’Ivoire 106th out of 139 countries on its IT networked readiness index, which grades economies on their IT usage, acceptance and efficiency. As in the ICT Development Index, this represents an increase of nine places over the previous year, with improvements in almost every indicator measured. The report acclaims the government’s efforts for creating a more business-friendly environment, reducing entry barriers to the industry, facilitating procedures for establishing businesses, integrating ICT solutions in the administration and supporting the spread of new technologies. However, the report also notes that while IT uptake is gaining momentum, efforts should now be directed towards improving network capacity to avoid broadband saturation and lowering prices for business to further generalise access to technology.

In the first half of 2018 the three mobile operators invested over CFA72bn (€108m) in the segment, a 71% increase from the previous year. These investments were mainly aimed at modernising existing infrastructure for a higher quality of service as well as covering a more substantial part of the national territory. As of March 2018, the three operators covered more than 97% of the country with the 2G network, nearly 73% by 3G, and more than half of the territory by 4G.

Increased Capacity

To keep up with growth in data traffic, MainOne – a West African connectivity and data centre provider – was issued a C1B licence by Bruno Nabagné Koné, the former minister of communications, digital economy and the post, as part of a $20m investment deal that includes the construction of an undersea cable running from Portugal to South Africa. The development is part of larger aims to create a wholesale connectivity service to increase data traffic capacity in Côte d’Ivoire, while linking it to nine other countries. The project, which started in June 2018 and is expected to be completed by mid-2019, will improve broadband access and reduce costs to ISPs, telecoms companies, private business and end users. The additional undersea link will add to the three existing cables connecting Côte d’Ivoire to West African and international networks, namely the SAT3/SAFE, the ACE and the WACS cables.

Fixed Lines

As the country’s mobile segment continues to advance, fixed-line services remain relatively underdeveloped. According to the ARTCI, as of mid-2018 the segment was made up of about 300,000 subscriptions with a penetration rate of 1.23%, which was held by two operators, Orange and MTN, with 79% and 21% of the market, respectively. Revenue produced by fixed lines was about 13 times less than from mobile subscriptions, at CFA18bn (€27m) in mid-2018. Fixed-line internet subscriptions also remain low, as a result of the limited connection of households to the networks and prohibitive costs. In 2018 only six out of every 1000 people in the country were connected to the internet by fixed line.

Mobile Internet

Following network upgrades, a reduction in prices and a surge in promotional offerings, the number of mobile internet users has risen dramatically. Speaking to regional media in February 2018, Bruno Kobé stated that over the course of 2017 the number of users in the segment grew from 10m to 17m. This translated to a penetration rate of 72%, well above the 30% average on the continent. However, agencies such as the International Telecommunication Union, the CIA in the US and the international tracking agency Internet Live Stats approximate the true figure to hover around 23% of the population.

According the ARTCI, as of June 2018 mobile internet generated for CFA25.6bn (€38.4m), with Orange occupying 46% market share, MTN 29% and MOOV 25%, which represented an increase of six percentage points by MOOV over the six-month period, as a result of investments in network development. The firm also saw its share of the 3G segment reach 42% as of mid-2018, compared to around 33% a year earlier.

Despite steady advances, there remain challenges to the uptake of mobile internet. According to “Triggering Internet Use in Côte d’Ivoire and Tanzania”, a study by GSMA, as of the first quarter of 2018 the 3G network covered 89% of the population; however, only around 23% were mobile internet users. Some of the main reasons people living in 3G covered areas do not use mobile internet include the inability to afford smartphones and low digital literacy rates. In 2017 some 77% of the population had a phone, nearly a third of which was a smartphone and another third a feature phone. Moreover, the study found gender discrepancies, such as lower literacy rates among women that indicate important growth opportunities exist within certain customer segments.

Regulation

In October 2017 the Parliament passed the Loi d’Orientation de la Société de Communication (Orientation Law of the Communication Society), aimed at supporting inclusive, open and transparent information. Alongside laying out guiding principles and an administrative framework, the legislation attributes responsibilities to various governing bodies and established a commission for the development of an information society to promote the access and use of new technologies and communication, such as a mandate for property owners to connect new buildings to optical fibre networks. Ahmed Cherif, managing director of VipNet, commented favourably on legislative initiatives encouraging infrastructure sharing, saying that this will enable small businesses to accelerate their development and provision of innovative services, thus ensuring their stability. “The regulatory framework that allows non-dominant players to lease the infrastructure of dominant operators should help improve the quality of service through safer and fairer competition,” he told OBG.

Universal Service

In a move to spread ICT solutions around the country, the National Agency for the Universal Service of Telecommunications (Agence Nationale du Service Universel des Télé communications, ANSUT) was set up in 2012. In addition to regulatory prerogatives, the agency is tasked with implementing the country’s digital strategy and extending the use of ICT to both public and private entities. With the goal of narrowing the digital gap between urban and rural areas, the body has been steadily expanding the country’s fibre-optic network. By December 2017 some 5000 km of cable had been completed, up from 2000 km a year earlier, with the overall aim of adding 7000 km in total.

“The public and private sector are working hand in hand to make sure ICT products are widely available. Technological inclusion is a major subject and projects such as the optic fibre backbone show the government’s commitment to improve access,” Narcisse Kouadio Godrin, general manager of Valsch Consulting, told OBG. In July 2018 the French Development Agency granted a non-sovereign €110m loan to ANSUT to facilitate completion of the project by year’s end. However, no further updates on the progress of the network had been released as of early 2019.

Ivorian regulators have long been working to speed up technological growth in the country, as well as increase access to technology more broadly in often underserved rural areas. In 2015 ANSUT launched the “Un Citoyen, Un Ordinateur + Une Connexion Internet” programme (which, in English, means “One Citizen, One Computer, One Connection”). The programme is aimed at distributing a total of 500,000 computers to citizens between 2014 and 2016.

The government has also worked with MNOs to subsidise computers bought with mobile money, bringing their cost down from as much as $300-400 when purchased from retailers to around $100. This target was coupled with the construction of 5000 cyber-centres in villages that are home to more than 500 people. In 2015 the regulators also removed taxes applied to IT equipment, tablets and mobile devices, as part of efforts to expand access to electronic devices, although this tax exemption was concluded in 2018. These efforts have gone far in expanding the country’s workforce pool that is needed to facilitate modernising existing businesses.

Cybersecurity

Much has been done in the country to fight cybercrime and rebuild the country’s reputation in this area, given its history of fraud and other internet security issues. In 2012 the government created the Platform for Fighting Cybercrime, an institution dedicated to conducting investigations and cybersecurity awareness projects within the population. A year later a stronger legal framework, which included defined punitive measures against cybercriminals was adopted by the Parliament.

More recently, in October 2018 the third Africa Cybersecurity Conference was held in Abidjan. The event was organised by France’s state-run agency Business France in collaboration with a wide range of local and international industry stakeholders. According to a report from West African security firm Jighi, cybercrime cost the continent $3.7bn in 2017, while some 90% of African businesses lack the means to protect themselves from losses.

An additional obstacle facing operators has been increased costs due to sabotage. In July 2018 international media reported that Orange had experienced a series of setbacks due to vandalised wires and materials stolen from 11 facilities in Biétry in Abidjan. This occurred after a fire in the firm’s transmission centre destroyed key equipment, such as fibre-optic SAT3 cable in April 2018. The company announced the halt of its investments in the optical fibre in Abidjan, citing approximately CFA15bn (€22.5m) in additional expenses due to the incidents.

Digital Governance

The government is engaging in the digitisation of its services and ministries. In 2018 the country was ranked 172nd globally in the UN’s E-Government Development Index, placing it three spots up from 2016 and the highest among the ECOWAS countries. Côte d’Ivoire went from a limited online presence in 2008 to digitising processes and offering a wide range of administrative procedures online in 2018 under its e-service programme that is spearheaded by ANSUT. The government has launched several ICT-based projects in education, health, agriculture and finance to modernise its processes, increase liability and transparency.

The government’s integration of digital technology into its record keeping and data transfer systems raises concerns over security; however, protective legislation is expected to prevent issues. “The deployment of online administrative services raises the question of personal data protection,” Keita Alhi, director-general of Electronic Management, told OBG. “In line with this, the government is expected to implement the 2013 law on the treatment and protection of immaterial data at the beginning of 2019.”

Productivity

Despite government support, businesses in the country have yet to integrate ICT solutions in their activities. According to the 2018 World Bank report “Aux portes du paradis : Comment la Côte d’Ivoire peut-elle rattraper son retard ?” (“At heaven’s gate: How can Côte d’Ivoire catch up?”), the economic situation in the country reveals that despite a 4.5% increase per year in labour productivity between 2012 and 2017, capital productivity slightly decreased. In fact, the country remains under the production possibility frontier reached by other emerging economies. For example, some 18% of Ivorian companies have their own website, and 60% of them use email with their suppliers or clients; while the continent averages 33% and 70%, respectively, in these areas. The report further indicates that only 3% of companies use imported licenses compared to 15% average across Africa. The country’s firms also spend half us much on research and development.

“Many companies in the country tend to develop in-house solutions for software that already exist on the market,” Vincent Claustre, head of ICT and information systems at Défis et Stratégies, an international consulting and business services company, told OBG. “It is necessary for companies operating in the private sector to start outsourcing IT and focus on their core activities in order to gain in cost-efficiency and productivity,” he said.

Incubators

Between 2016 and 2018 the country was one the fastest-growing ecosystems of active tech hubs in the ECOWAS region, expanding its number of such facilities from five to 13, behind only Nigeria and Ghana with 55 and 24, respectively.

The growth in tech hubs is particularly noteworthy given the challenges inherent to operating in the region. “The construction of data centres in Côte d’Ivoire, and more generally in West Africa, is conditioned by the need to have at least two energy suppliers and distributors on site to ensure the high availability of services, which is not yet the case in general,” Jean-Luc Sampah, managing director of Socitech CI, told OBG. “The construction of local data centres in Africa represents an important step in guaranteeing the sovereignty of the country’s data.”

MNOs are taking advantage of the opportunity presented by the evolving tech environment to innovate and tap into local skills. In 2014, for instance, Orange launched an accelerator programme, Orange Fab, aimed to support start-ups in developing solutions for its platforms and enhancing service delivery to its customers. A year later, MOOV launched Cyberlab to train 4500 Ivorian entrepreneurs to support them in mastering digital tools and develop activities on the internet. In 2017 MTN launched its own programme, Y’ello Startup, designed to support technology-based entrepreneurs with a social impact.

A significant challenge for young start-ups remains the availability of funds: they typically lack assets for collateral and bear high risks, as well as often face high interest for loans from traditional banks and some degree of bias, as tech enterprises are typically still not well understood. “Credit institutions in Côte d’Ivoire are reluctant to grant loans to companies in the ICT sector because they are unfamiliar with their innovative business models and the modern ICT environment in general,” Mohamed Sounkere, co-founder and CEO of Veone, an Abidjan-based IT services firm specialising in cloud computing, told OBG.

In September 2018 some progress in this area was made when the Youth Digital Foundation, an initiative of the sector ministry including bodies aimed at promoting and developing ICT use in the country, began consultations to adopt an Ivorian Startup Act.

VITIB

To fulfil its aspirations to become a regional centre for new technologies, the country set up a large free trade zone in Grand-Bassam, near the economic capital city Abidjan. In 2006 the village of information and communication technologies and biotechnologies company (Village des Technologies de l’Information et des Biotechnologies, VITIB) was established to coordinate and develop the activities of the free trade zone. The Ivorian government holds an 8% stake in the company, with the rest of its equity belonging to various public and private actors – both national and international.

The development of the zone was financed with a loan of CFA131bn (€196.5m) from the Banque Ouest Africaine de Développement, an Islamic Development Bank loan of CFA5bn (€7.5m) and a CFA10bn (€15m) loan from the government of India through its Export-Import Bank. The 700-ha area has 30 ha under operation and an additional 180 ha under construction. ICT and biotechnology-related businesses established in the VITIB benefit from tax exemptions, although must make a royalty payment of 2.5% of their annual revenue to the VITIB.

In December 2017 the Mauritius Africa Fund signed an agreement with the government of Côte d’Ivoire for the construction of 67,000-sq-metre twin towers in the zone. In 2018 a 7.2-metre satellite was being installed to complete a VSAT station in the zone’s data centre, bringing the total number of tech projects in the zone to six, including a production studio, telecoms laboratory, DNA test laboratory, computer assembly unit and pharmaceutical production factories already present at the site.

TNT

A significant development in the sector is the long-awaited arrival of digital terrestrial television (Télévision Numérique Terrestre, TNT). To boost national content production and reduce the use of the international bandwidth, the government terminated the monopoly previously held by the public Ivorian radio-TV company and liberalised the audiovisual space, granting licences to four private media companies and seven private network package providers in December 2016. The move will allow for the provision of over 500 TV channels, including A+ from Canal+ Group and Life TV from Voodoo Group as public channels, and a private package from the French media and telecoms group Free.

Initially planned for the first quarter of 2018, the CFA22bn (€33m) contract for developing the project’s infrastructure was issued to a consortium, which includes South Africa’s Aucom, a telecoms service provider, and the US-based GatesAir, an electronics manufacturer that produces, markets and services terrestrial broadcast equipment. The TNT rollout – that has been announced to occur after December 2018, although no updates have been made public as of early 2019 – will be managed by the state-owned Société Ivoirienne de Diffusion.

Outlook

Noticeable improvements in digitisation have been made by the country as it lays the infrastructure and legal framework for optimal ICT development. Increased collaborations between innovative start-ups and larger actors, as well as continued efforts to boost IT education opportunities and spread the general understanding of benefits gained from integration to both individuals and private businesses will go far in advancing the sector.